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Joseph Stiglitz on the Pandemic Economy and Why He Backs Sanders' Filibuster for $2000 Stimulus Checks
Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=51501"><span class="small">Democracy Now!</span></a>   
Tuesday, 29 December 2020 13:34

Excerpt: "The House of Representatives has voted to approve a measure that would increase stimulus checks from $600 to $2,000, sending the bill to the Senate, where its fate is uncertain."

Economist Joseph Stiglitz. (photo: Murdo MacLeod/Guardian UK)
Economist Joseph Stiglitz. (photo: Murdo MacLeod/Guardian UK)

Joseph Stiglitz on the Pandemic Economy and Why He Backs Sanders' Filibuster for $2000 Stimulus Checks

By Democracy Now!

29 December 20


he House of Representatives voted Monday to approve a measure that would increase stimulus checks from $600 to $2,000, sending the bill to the Senate, where it faces a standoff today. The House also voted to override Trump’s veto up the $740 billion National Defense Authorization Act.

In the Senate, Republican Majority Leader Mitch McConnell is expected to ask for unanimous consent today to override Trump’s veto of the NDAA, but independent Senator Bernie Sanders has said he’ll filibuster to delay the crucial vote unless the Senate also holds a vote on the $2,000 checks. Sanders tweeted, quote, “If McConnell doesn’t agree to an up or down vote to provide the working people of our country a $2,000 direct payment, Congress will not be going home for New Year’s Eve. Let’s do our job,” Sanders said.

Keeping the Senate in session would conflict with the campaigns of Republican Senators David Perdue and Kelly Loeffler in the January 5th runoff races that will determine the control of the Senate, in Georgia. Their opponents, Democrats Jon Ossoff and Raphael Warnock, are both campaigning in support of the $2,000 checks.

This all comes after President Trump’s delayed signing of the massive COVID-19 relief bill Sunday caused a lapse in unemployment benefits for millions, because that lapsed on Saturday night. He was golfing through the weekend in Florida.

For more on the economic crisis both here in the United States and worldwide, we’re joined by the Nobel Prize-winning economist Joseph Stiglitz, Columbia University professor and chief economist for the Roosevelt Institute. He served as chair of the [Council of] Economic Advisers under President Bill Clinton and chief economist at the World Bank. His latest book, People, Power and Profits: Progressive Capitalism for an Age of Discontent.

Professor Stiglitz, welcome back to Democracy Now!

JOSEPH STIGLITZ: Nice to be here.

AMY GOODMAN: Talk about the significance of these checks and what Bernie Sanders is doing today, saying he’s going to filibuster. He will not let McConnell allow this vote not to take place in the Senate, up or down, on the $2,000 check.

JOSEPH STIGLITZ: Well, one of the things that he’s pointing out very forcefully is the long history of McConnell not allowing the Senate to take votes on issues, bill after bill, that the House has passed. You know, we think of ourselves as a democracy, but this one person has blocked the ability of the Senate to go on record of saying whether they’re for or against a whole variety of measures that large numbers of Americans think are important.

And this one is very important. This one is whether those at the bottom of our income distribution will have enough money to tide them over to meet their bills. You know, millions and millions of Americans lost their jobs, haven’t been able to pay their rent. There was a stay on eviction, but those bills kept coming in. And now they owe nine months of rent. And without this kind of help, they won’t be able to pay what is due.

AMY GOODMAN: You know, we had Congressman Ro Khanna on yesterday, who was talking about why was it — you know, President Trump saying he wouldn’t sign the COVID relief package unless people got $2,000 instead of the $600. In the end, he gave all that up. But, in fact, Ro Khanna had long tweeted: Why are we not demanding that people get $2,000? So, talk about Trump and him using this, though in the end he didn’t insist on it. And then go into that time period, President Trump signing after Saturday night, which meant this lapse in unemployment benefits that people may then get late, and when you’re on the edge, that could mean no food for your family for a period of time, or you get the money later.

JOSEPH STIGLITZ: It was cruel, and it was foolish. While he was playing golf, as you said, about 12 million Americans were about to lose their unemployment insurance. Because he couldn’t make a decision — you know, really amazing, president of the United States couldn’t make a decision — those 12 million people will go for a whole week without any source of income, without their unemployment check — and then, all for naught, because then he signed it. You know, he could have made the decision a day earlier, and that would have avoided an enormous amount of suffering.

AMY GOODMAN: These bills are the largest in U.S. history, these budgets that have been passed, are being fought over. Can you talk about what this will mean and how COVID — and we should step back. It’s not just the virus, because the virus has affected the world. But the U.S. has by far the hugest mortality and morbidity figures, almost 20% of the deaths and the infections in the world, even though we have less than 5% of the world’s population — this on the shoulders of President Trump and how he’s allowed it to rip through this population like no other country. Talk about what this means for what Joe Biden and Kamala Harris will inherit and what they need to do, Professor Stiglitz.

JOSEPH STIGLITZ: Well, you’re absolutely right that COVID-19 has affected America much worse — in some ways, not a surprise among the advanced countries, because we are the only country among the advanced countries that doesn’t recognize access to healthcare as a basic human right, and the result of that is we have poorer health condition and more health disparities. This is not an equal opportunity virus. It goes after people with poor health conditions. The president, though, mismanaged this, even given that, terribly. And that’s the reason why we’ve been so badly affected.

It is the disease that has the enormous adverse effect on the economy. People don’t want to travel. They don’t want to eat out in restaurants. The remarkable thing is that the United States economically has done a little bit better than Europe, for instance. And one of the reasons for that was precisely the massive assistance that we provided in the spring with the — it was called the CARES Act — almost $3 trillion. And this had an enormously beneficial effect on the U.S. economy.

But it was predicated on the assumption that the economic downturn — the virus, the virus, would last for six weeks, maybe longer that, and then we would bounce back. Well, I always thought that was a fantasy. Anybody that knew about epidemiology knew that that was not likely to happen. But the various provisions ended mid, late June, and Congress, the Republicans, refused to do anything. The House passed what was called the HEROES Act to try to keep money flowing into the economy, but the Senate — talking again about the power of Mitch McConnell — just wouldn’t bring it up.

And so, we are now six months later, the end of the year. The disease didn’t just disappear, and looks like we’re going to face this for months to come, and it is very apparent that we need another large amount of money. And that’s where the additional money, that $2,000, would be of enormous benefit.

AMY GOODMAN: So, also included in the bill, these tax breaks to the wealthy, including increased military spending for about $5 billion. Americans for Tax Fairness put out a report saying the collective wealth of billionaires in the U.S. has jumped by close to a trillion dollars, $931 billion, since mid-March. The report found 22 million U.S. adults reported not having enough food to eat. More than half of those adults had children in their households. Nearly 62 million U.S. residents lost work between March and September. And yet this massive windfall for the country’s wealthiest billionaires.

JOSEPH STIGLITZ: Well, that’s a reflection of what is becoming called the K-shaped recovery. When we kept interest rates so low, when those who have access to Zoom and technology can largely avoid the worst effects of the disease, you’re going to get that kind of K-shaped recovery. The low interest rates benefit those who own shares, and those have done fantastically well. And that’s why, in that context of this very unequal incidence of the disease and the incidence of the economic impact, that $2,000, that goes to those at the bottom, is really important, because it — you know, it doesn’t really remedy the K-shaped recovery, but it ameliorates some of the worst consequences.

AMY GOODMAN: Professor Stiglitz, you have urged rich countries to provide assistance to developing economies to deal with the aftermath of this pandemic, that has been especially devastating in parts of the Global South. In a recent blog post for the International Monetary Fund headlined “Conquering the Great Divide,” you called specifically for the issuance of $500 billion in special drawing rights, writing, quote, “The provision of SDRs would be of enormous assistance to developing economies and emerging markets — with no or little cost to the taxpayers of developed economies.” Can you explain how this would work and what your concerns are about the impact of this crisis in poor countries?

JOSEPH STIGLITZ: Well, it’s very simple. You know, the Fed has the power to print money, to create money. That has helped a lot of businesses in the United States. The IMF is sort of like the central bank of the central banks, and it can create a kind of global money, which are called special drawing rights. It was part of the idea that Keynes had when the IMF was created. And we used it in the 2008-2009 crisis. There was a big issuance of these SDRs.

The head of the IMF has called for a $500 billion issuance. You know, the United States, we were talking about, a minute earlier, how we’ve had this massive assistance, over $3 trillion of fiscal and another $3 [trillion] to $3.5 trillion of monetary support. Well, the poor countries just don’t have those kinds of resources. The amount of money that they’ve been able to muster to fight the disease and to fight the economic aftermath has been minuscule. And this $500 billion, given in proportion to what they call the quotas, would be an enormous help to these developing countries and emerging markets.

One person, one person alone, stands between the issuance of these, and that is the secretary of treasury under President Trump, Mnuchin. And he has not given any good reason for not doing it. I hope it’s one of the first things that Biden’s secretary of treasury will do once they take office.

AMY GOODMAN: This pandemic will force many countries into a debt crisis. What is being done to alleviate this?

JOSEPH STIGLITZ: Almost nothing. You know, I was worried before the pandemic that too many developing countries were getting overly indebted. You know, Wall Street loves to make loans. They make a lot of money out of loans to developing countries and emerging markets. Interest rates are higher. So they push governments to borrow, and — you know, just like they push a lot of poor Americans to borrow too much. So I was worried that there was actually too much debt on the part of too many countries.

Well, once the pandemic happened, their incomes plummeted. And so, many countries are at the brink. And there has to be some response. Now, initially, the G20, which is a group of countries that represented the vast majority of GDP income in the world, got together and said, “We will have a stay on payments, on debt payments, but only for the poorest countries, not the emerging markets, only for the official debt — that is, government-to-government debt — not for private debt, not for multilateral debt.”

And now that the disease has continued for 10 months and is likely to continue, especially in those countries, for much, much more, because they can’t afford the vaccine, won’t get it — they’re at the back of the line — the problem is, what was a temporary problem of inability to pay now is a real problem. There is a need for a debt restructuring. And unfortunately, we don’t have a good framework for that debt restructuring.

AMY GOODMAN: Finally, if you can talk about the team that Biden is pulling together and those he hasn’t named yet? You know, the man who says he will filibuster today, Senator Sanders, has been pushing hard to be named labor secretary. We don’t know if that will happen. I’m wondering your thoughts on this. Also, you know Janet Yellen, the new treasury secretary nominee, very well.

JOSEPH STIGLITZ: Yeah, she was my student the first year I taught at Yale back in 1967. She was a first-rate student. I knew she was going to make a real contribution, both academically and then, as she has, to policy.

I actually think we need Bernie Sanders in the Senate. He’s been — the role he’s playing right now in forcing, hopefully, the Senate to take up the issue of $2,000 help is an example —

AMY GOODMAN: Would you endorse this filibuster today?

JOSEPH STIGLITZ: Yes, I think I would. You know, the point is that there will — eventually, the Senate will have to deal with it. And I think the refusal of McConnell to have democratic processes work — let people go on the record of what their view on this $2,000 — seems to me part of the democratic process. There shouldn’t be that much power in the majority leader in the Senate.

AMY GOODMAN: Joe Stiglitz, I want to thank you so much for being with us, Nobel Prize-winning economist, Columbia University professor, chief economist for the Roosevelt Institute. your social media marketing partner